Why is gas expensive in California?

Los Angeles
CNN
—

U.S. gas prices have fallen from all-time highs in the fall of 2022, but in at least one state some drivers are still hunkering down at the pump.

The current average gas price in the United States is $3.10. AAA says it costs $4.49 in California.

This is normal. Californians consistently pay more for gas than the rest of the world. A combination of factors, including environmental regulations, higher taxes, and fewer regional refineries, are driving up gas prices in the Golden State.

One of the more notable factors is that the state actually burns the cleanest gas in the world right now, said Severin Borenstein, a professor at the Energy Institute at the University of California, Berkeley’s Haas School of Business. It is said that it is a thing.

Borenstein said California has a unique blend of fuels that emit fewer greenhouse gases when burned.

California has historically led the way in reducing emissions. Due to the 1970 Clean Air Act carve-out, California is the only U.S. state that can set stricter emissions standards than the federal government.

It may seem strange that a state is given the power to set its own rules while the rest of the country is required to either follow federally set standards or follow California’s standards. But California has been battling air quality issues for decades.

According to the California Air Resources Board, Los Angeles first experienced “smog” in the summer of 1943. Visibility was reportedly only three blocks wide, and Los Angeles residents said their eyes and lungs felt burning and they felt nauseous.

California’s government has launched an effort to stop the “gas attack,” as it was once called, regulating the state’s power plants and refineries.

In 1966, California became the first state to pass tailpipe emissions standards, and in 1967, Governor Ronald Reagan approved the Mulford-Carell Air Resources Act to combat pollution.

“We must always look for ways to improve our environment to match technology and growth,” President Reagan said when signing the bill.

California’s special gasoline blend stems from the state’s efforts to curb emissions. It costs about 10 cents more per gallon of gas, Borenstein said. In return, California has cleaner air. “Proponents will point out that the reason you can see mountains from Los Angeles now is the formula we started using almost 30 years ago,” he says.

“No one in the world is using it,” he added.

But even though California’s air pollution problem has improved, many California cities still rank among the most polluted in the nation, according to a recent study by the American Lung Association.

Hawaii is currently the only state with higher gas prices than California, but Hawaii’s geographic isolation plays a large role in the state’s overall high gas prices. California doesn’t have the same problem.

However, in the fall of 2022, gas prices in California soared to an all-time high of nearly $6.50 per gallon as multiple refineries shut down.

The decline in the number of refineries in California is another reason for the widening gap in gasoline prices between California and the rest of the country.

Currently, only 11 major refineries can produce gasoline that meets California’s specific environmental standards. These 11 refineries produce 90% of California’s gas and diesel fuel, according to the California Department of Energy.

“The problem is that California is kind of isolated from the rest of the country in terms of gasoline requirements,” said Patrick de Haan, head of petroleum analysis at GasBuddy. “The number of refineries that can produce to that specification is decreasing.” And “if one of the refineries goes down, that’s a much bigger problem now than it was a few decades ago,” he said. Told.

However, this problem may be temporary. California officially passed a law in 2022 that will ban the sale of all new gasoline-powered vehicles by 2035.

But for the time being, many Californians remain Fill the car with gasoline.

In addition to high bills, California motorists also pay some of the highest taxes in the country, according to data compiled by the U.S. Energy Information Administration.

California drivers pay excise and sales taxes per gallon.

California is characterized by double taxation on gasoline. Most states have no sales tax on gasoline.

Compare California’s current average gas price of $4.49 to lower-tax southern states such as Texas at $2.75, Oklahoma at $2.66 and Louisiana at $2.78.

But Borenstein has another theory as to why gas prices in California are so high.

“California has far fewer off-brand stations, not just Costco and Safeways, but Rotten Robbie’s,” Borenstein said. “It’s like Joe’s gas station.”

Borenstein estimates that’s because Californians are paying more attention to branded oils like Chevron, Shell and Mobil.

“I think part of the problem is that Californians aren’t buying gasoline as aggressively,” he says.